What Type of Trader Are YOU?
What Type of Trader Are YOU?
John Carter is the founder of SimplerTrading, author of the ebook Swing Trading Hacks and the best-selling book, Mastering The Trade. During our interview for Money Revealed John told me that he grew up with a father who was a stockbroker… which had a major impact on John’s financial future!
As a senior in high school, John had saved up $1,000 working a summer job at a cookie shop and overheard some of his father’s investor friends discussing investing in something called “Intel.”
He gave his father’s friends his money to invest, and the next week was rewarded handsomely with his original $1,000 plus $800 interest. This, understandably, got him interested in the stock market.
From there, John continued to trading. In college, he even traded with a girl’s student loan money… which worked out well, not only because of the returns but because he eventually married her.
After college, he worked as a financial analyst for several years and eventually transitioned to trading full-time on his own.
John has dabbled in many different types of trading… And, while he spoke about his trading experience to me he named the 5 types of trades: scalping, day trading, swing trading, position trading and investing.
I took the liberty of doing some research on what each type of trading was and here is what I found out…
Scalping is a trading strategy geared toward attaining profits on minor price changes.
Traders who implement this strategy place anywhere from ten to a couple of hundred trades in a single day with the belief that small moves in stock price are easier to catch than large ones — traders who implement this strategy are known as scalpers.
The buying and selling of securities on the same day, often online, on the basis of small, short term price fluctuations.
A short-term strategy used by traders to buy and sell stocks whose technical indicators suggest an upward or downward trend in the near future — generally one day to two weeks.
As a position trader, you would hold a position in some type of asset long term. This could mean anywhere from several weeks to several years.
Typically, position traders are looking at trends in the prices of securities. This is a great type of trading if you want to make lucrative returns that outweigh the price of transactional fees.
When you invest your goal is to accumulate wealth gradually over a long period of time. This is done through the buying and holding of a portfolio of different types of securities.
Since investing is another long term trading strategy you will usually hold on to them between a few years up to a few decades. This way you get to take advantage of perks like dividends, interest, and stock splits.
Let’s Wrap it Up…
If you want to be a trader you’ve got to know which type of trading (or investing) that you want to do.
Brush up on these terms and decide which type of trading is best for you.